What Can You Afford?

Most buyers start from a price and hope it works. Lenders start from your income, so this does too: it applies a debt-to-income ceiling, subtracts what you already owe each month, and turns what is left into a loan and then a price.

The ceiling is an input rather than a fixed rule, because it varies by country and lender — commonly somewhere between 30% and 45% of gross income including existing debts.

How it works

Take the share of gross income a lender will allow for all debt, subtract what you already repay each month, and the remainder is what can service a mortgage. Reverse the repayment formula on that figure to get the loan, then add your deposit to get a price.

Worked example

On 6,000 a month with 400 of existing repayments and a 36% ceiling: 2,160 is allowed for all debt, leaving 1,760 for a mortgage. At 6.5% over 25 years that supports a loan of roughly 260,000; with a 60,000 deposit, a price near 320,000.

Why the honest number is lower

This is the maximum a lender may permit, not the amount you should borrow. It ignores the cost of actually owning the place — tax, insurance, maintenance, service charges — and it assumes your income is stable. Buying at the ceiling is how people end up unable to absorb a rate rise.

Frequently asked questions